A financial feasibility study released yesterday (Monday) said the Spinifex Ridge open-cut mine could profitably produce 5% of the world's supply of the specialty metal starting in July 2009. The 470 million ton moly and copper deposit could last 20 years, the company said.

Molybdenum, also called moly, was discovered in 1778 by Carl Wilhelm Scheele , the famous pharmaceutical chemist, and was then first isolated in 1781 by Peter Jacob Hjelm. It is a high-melting-point alloying metal – in fact, it has the sixth-highest-melting point of any known element – and for that reason is used in iron, steels and super-alloys to enhance harden-ability, strength, wear and corrosion resistance. Those qualities make it a key ingredient in the high-grade steels used in oil pipelines, nuclear reactors and desalination plants. Moly is produced on a large scale in North America, South America and China, but Spinifex would be Australia's first major moly mine.

Given that moly is an unfamiliar metal to many Australian investors, Moly Mines has attracted heavy interest from overseas and has a dual-listing in both Australia and on the Toronto Stock Exchange (ASX/TSX: MOL).
The company has already ordered some "long lead-time" items for the mining project and it expects to complete the rest of the project financing by the end of the 2008 first quarter.

The cost estimate was higher than the original estimate of $488 million two years ago, partly because the project's annual production target was boosted to 20 million tons from the original target estimate of 15 million tons a year.

Moly Mines is reviewing several financing models, although it's understood that virtually any strategy will involve a mix of debt and equity. Indeed, the company said it's been clear that the project's characteristics could allow for more than 50% of the funding to come from debt, including high-yield bonds.

Moly Mines has also held discussions with potential joint venture partners, and published reports state that the company has made it clear that it could sell up to half the project to a venture partner under the right circumstances.

Moly Mines general manager Collis Thorp said Spinifex Ridge was a "very, very robust project" but also noted that the large open-cut mine would be extremely simple to operate.

"We have no innovation at all," he said. "We're about as dull and bloody boring as you can get."

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